Mon, Dec 22 2008, 15:00 GMT
by George Antonakos
EUR/USD
Resistance: 1,4030/ 1,4060/ 1,4100/ 1,4150-55/ 1,4200-10/ 1,4260/ 1,4310/ 1,4400
Support: 1,3900-10/ 1,3830/ 1,3780/ 1,3730/ 1,3675/ 1,3630/ 1,3580
Comment: High volatility in the forex market last week, as euro formed a 1350 pip move (which usually could be a hole year’s move), and it closed almost with 550 pips profit. Such high volatility is usually a result of low liquidity during the holidays and due to the market’s crisis and perhaps we should get used to it next year..
After the formation of a classic reversal candle on Thursday and the completion of the 61.8% retracement level from the decline, euro moved downwards to our target area at 1,3800-3900. This week begins with an upward reaction from that area and euro is testing resistance at 1,4050. The corrective move from 1,4720 tops seems normal after the extensive rise and it could be continued towards 1,3600, where 50% retracement level is completed. Euro is likely to form one more upward move towards 1,4700-20 tops of higher and the lower level should be at 1,3350-00 area.
Important support at 1,3800-3900 has been reached and we will wait for the market’s reaction. First important resistance today is found at 1,4060-75, followed by 1,4200. If the area of 1,4310-30 is breached, the retracement should be completed at previous week’s lows, and a pullback to previous tops would be possible.
If first resistance levels at 1.4060-70 are not breached, and price remains within the downward channel in the hourly chart, it would indicate that bears control the game. Reversal signs should appear at 1,3600 (+- 30) area. 
*STRATEGY:
The short term trend is bearish and we will follow it trying sell positions at 1,4040-60, with stops above 1,4100 and target at 1,3900. Sell orders could also be tried at a move below Friday’s lows, with target at 1,3600-30. Alternatively, an upward break of 1,4080, may be followed with buy orders and target at 1,4200-50, with stops below 1,4000.
We should mention once again that we are in low liquidity and high volatility conditions, we should be very cautious regarding our short term positions.
*The above mentioned strategy refers to orders that we may follow for personal accounts, depending on the market analysis and the potential reach of resistance and support levels. We do not encourage buy or sell orders, as its effective use is based on correct risk management and the ability of position readjustment depending on current conditions.
Published on Mon, Dec 22 2008, 15:03 GMT
FXGreece
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